As a country of 1.3 billion remains confined indoors, its economic wheel has almost stopped spinning. As a result, the Government and the Reserve Bank of India have stepped in to inject a financial dose which should keep things afloat until we get back to business as usual. For the common man, in particular, the RBI has announced a moratorium, wherein, in respect of all term loans (including agricultural term loans, retail and crop loans), all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies) (“lending institutions”) are permitted to grant a moratorium of three months on payment of all instalments falling due between March 1, 2020, and May 31, 2020. This includes automotive loans too.
Now, there are some unanswered technicalities, where banks are currently studying the notification issued by the regulator and will communicate the details to all their customers shortly. These include whether EMIs for all customers who have availed of a loan will be a part of this moratorium or whether it is voluntary, where those who are unable to pay have to notify the bank. Since it is already the end of March and the moratorium has been backdated to the 1st of this month, most EMIs must’ve already been paid since banks generally decide on a due date for the first half of the month. However, RBI’s decision (once all the lenders come out with proper communication for borrowers) should also cover those who have been unable to pay this month for various reasons. Again, for more clarity about this, do contact your bank and do not believe in hearsay.
According to RBI’s official notification, “The repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period. The rescheduling of payments, including interest, will not qualify as a default for the purposes of supervisory reporting and reporting to Credit Information Companies (CICs) by the lending institutions. CICs shall ensure that the actions taken by lending institutions pursuant to the above announcements do not adversely impact the credit history of the beneficiaries.”
Since these are unusual times, manage your financial resources wisely and do not consider this moratorium as a payment holiday. Once these three months are over, you will have to continue repaying as usual and your loan term will be shifted for three more months if you are eligible for this relief and decide to avail of it. For the most accurate information though, wait for your lender to notify or try and get in touch if your EMI due date is approaching near. Make wise decisions, stay safe, do the right thing, and we should all be able to triumph over this successfully.